Simplified Employee Pensions (SEP)
What is it? A tax-deferred retirement plan for small businesses with fewer than 25 employees and the self-employed. Employers may contribute 15% of an employee?s compensation to an IRA, and a self-employed person may contribute 13.04% of income. The IRS says the maximum contribution is $30,000 in 1999, but since the earnings cap is $160,000, effective contribution limits are $24,000 for employers and $20,870 for the self-employed. Other than the higher contribution limits, SEPs generally follow the rules for IRAs. Also known as a SEP-IRA.Added By: Morgan
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